Case JAD Doc 266 Filed 07/31/17 Entered 07/31/17 23:39:15 Desc Main Document Page 1 of 53

Transcription

1 Document Page 1 of 53 IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA IN RE: Bankruptcy No JAD Royal Flush, Inc., Chapter 11 Debtor. Document No. AMENDED CHAPTER 11 PLAN OF REORGANIZATION BY: /s/ Donald R. Calaiaro Donald R. Calaiaro, Esquire PA I.D. #27538 CALAIARO VALENCIK 428 Forbes Avenue, Suite 900 Pittsburgh, PA (412) DATED: July 31, 2017

2 Document Page 2 of 53 TABLE OF CONTENTS 1 Definitions... Page 3 2. Classification of Claims and Equity Interests into Classes... Page 7 3. Designation of Classes... Page Impairment... Page Implementation of the Plan... Page Provisions for Claims; and Equity Security Interests Generally... Page Treatment under the Plan and Provision for Payment... Page Retention of Jurisdiction... Page General Provisions... Page Amendment... Page Certificate of Service... Page 53 2

3 Document Page 3 of 53 IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA IN RE: Bankruptcy No JAD Royal Flush, Inc., Chapter 11 Debtor. Document No. AMENDED CHAPTER 11 PLAN OF REORGANIZATION Royal Flush, Inc.., a Pennsylvania corporation and the Debtor-in-Possession, proposes the following Plan of Reorganization ("Plan") pursuant to Section 1121(b) and (c) of the Bankruptcy Code ("Code"), 11 U.S.C. Section 1121(b) and (d). ARTICLE 1 - DEFINITIONS For purposes of this Plan, except as otherwise expressly provided herein or unless the context otherwise requires, the following capitalized terms shall have the meaning set forth below: 1.1 Administrative Claims shall mean the costs and expenses of administration of this Chapter 11 case allowed under Section 503(b) and entitled to priority under Section 507(a)(1) of the Code. 1.2 Allowed Claim shall mean a claim against the Debtor to the extent. a. A proof of such claim was: (1) Timely filed; or (2) Deemed filed pursuant to Section 1111(a) of the Bankruptcy Code; or (3) Filed late with leave of the Bankruptcy Court after notice and opportunity for hearing given to the Debtor's counsel; and 3

4 Document Page 4 of 53 b. (1) Which is not a Disputed Claim; or (2) Which is not contingent; or (3) Which is allowed (and only to the extent allowed) by a Final Order, after objection, if any, and hearing; and c. (1) With respect to any professionals seeking compensation in connection with this case, when said compensation has been allowed by Order of the Bankruptcy Court after notice and hearing as provided in the Bankruptcy Code. 1.3 Litigation shall mean actions in the United States District Court or Bankruptcy Court for the Western District of Pennsylvania with any caption including the Debtor. 1.4 Bankruptcy Court shall mean that unit of the United States District Court for the Western District of Pennsylvania known as the United States Bankruptcy Court for the Western District of Pennsylvania located at 54th Floor, U.S. Steel Tower, 600 Grant Street, Pittsburgh, Pennsylvania or any Court having jurisdiction to hear and determine appeals there from. 1.5 Business Day shall mean between 9:00 a.m. and 5:00 p.m. local Pittsburgh time on every day, except Saturdays, Sundays and national holidays. Code. 1.6 Claim shall have the meaning set forth in Section 101(4) of the Bankruptcy 1.7 Class shall mean the category of holders of claims or equity interests in such category as provided by 11 U.S.C of the Code and as defined in the context of this Plan. 1.8 Collateral shall mean any property in which the Debtor has an interest and which secures an allowed claim. 1.9 Confirmation Date shall mean the date when the clerk of the Bankruptcy 4

5 Document Page 5 of 53 Court shall have entered the Confirmation Order on the docket Confirmation Order shall mean the Order entered by the Bankruptcy Court confirming the Plan pursuant to Section 1129 of the Code Creditor shall mean any person having a claim against the Debtor that arose on or before the filing date or a claim against the Debtor's estate of a kind specified in Section 502(g)(h) or (I) of the Code Disclosure Statement shall mean the Disclosure Statement of the Debtor, filed with and approved by the Court pursuant to Section 1125 of the Code Disputed Claims shall mean alleged claims against the Debtor listed as disputed, contingent or unliquidated on the Debtor's schedules or amended schedules for which a timely proof of claim is filed, or to which an objection has been timely filed within sixty (60) days after the confirmation date by a party in interest and which objection is not the subject of a Final Order or has not been withdrawn Effective Date of the Plan shall mean for each allowed claim, which is to receive cash under the Plan the sixtieth (60th) business day after the Confirmation Order becomes a Final Order Filing Date shall mean September 15, 2016, the date on which Royal Flush, Inc. filed its petition for under chapter 11 of the Bankruptcy Code with the Clerk of the Bankruptcy Court Final Order shall mean an order, judgment or decree of the Bankruptcy Court as to which (a) any appeal that has been timely taken has been finally determined or dismissed; (b) the time for appeal has expired and no appeal has been timely taken in accordance with Rule 8002 of the Rules of Bankruptcy Procedure and any applicable local 5

6 Document Page 6 of 53 procedural rule; or (c) an appeal has been timely taken, but such Order has not been stayed by appropriate cash bond or equivalent under Rule 8005 of the Rules of Bankruptcy Procedure Plan shall mean this Amended Plan of Reorganization dated July 31, 2017, as the same may be amended or modified from time to time in accordance with the provisions of this Plan and Section 1127 of the Code, all addenda, exhibits, schedules, releases and other attachments hereto, all of which are incorporated herein by reference as though fully set forth herein Priority Claim shall mean any claim entitled to priority pursuant to Section 507(a) (1) [Administrative]; (2) [Wages]; (3) [Employee Benefits], of the Code to the extent it is an allowed claim; except for priority tax claims Priority Tax Claim shall mean any claim entitled to priority pursuant to Section 507(a) (7) of the Code to the extent it is an allowed claim Proponent of this Plan shall mean the Debtor, Royal Flush, Inc Schedules shall mean the schedules or amended schedules of assets and liabilities filed by Royal Flush, Inc., with the Bankruptcy Court as required by Section 521 of the Code, and any amendments thereto as allowed by the Bankruptcy Court Secured Claim shall mean an allowed claim in respect of which a security interest is held in or against any property of the Debtor's estate, to the extent of the value of such Creditor's interest in the estate's interest in such property; and to the extent the claim is perfected against a trustee under 11 U.S.C. Section 544. If the value of such Creditor's interest is less than the amount of the allowed claim held by it, then such Creditor shall hold an unsecured claim for the deficiency amount; if the Creditor's claimed 6

7 Document Page 7 of 53 security is not perfected, it will have an unsecured claim; but only to the extent the Creditor has filed a claim Secured Creditor shall mean any person or entity, which holds a secured claim Security Interest shall mean a lien; as such term is defined in Section 101(33) of the Code on any of the property of the Debtor's estate Unsecured Claim shall mean any claim other than an administrative claim, secured claim or a priority claim to the extent it is an allowed claim Gender and Number when used herein, words importing any gender may be applied to and include all persons; words importing the plural number may be applied to and mean a single person or thing, and words importing the singular number may be applied to and mean more than single person or thing General Rules of Interpretation unless otherwise defined herein, all terms used in this Plan shall have the meanings set forth in the Bankruptcy Code Disbursing Agent shall be Donald R. Calaiaro, Esquire with an address of 428 Forbes Avenue, Suite 900, Pittsburgh, PA In the event that Donald R. Calaiaro is incapacitated or unable to perform the duties of the Disbursing Agent, he may designate a replacement Disbursing Agent. The Disbursing Agent shall collect and disburse funds to Classes 12 and 13 under this Plan. ARTICLE 2 - CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS INTO CLASSES 2.1 Class 1, Administrative Claims [Unimpaired] 7

8 Document Page 8 of Class 2, First National Bank of Pennsylvania [Impaired] - first priority secured interest liens in the personal property assets of the Debtor, including inventory, chattel Paper, accounts, receivables, equipment, documents and general intangibles as well as certain titled motor vehicles as more fully set forth in certain notes, security agreements, guarantees and other loan security documents( Loan Documents ) executed by the Debtor 2.3 Class 3, Ally Financial [Impaired] - Secured in 2014 Dodge Caravan, 2014 Jeep Wrangler, 2014 Ram 5500, 2014 Ram Class 4, Chrysler Capital [Impaired] - Secured in (2) 2014 Ram 2500s, 2014 Ram 1500, 2015 Ram Class 5, J.P. Morgan [Impaired] - Secured in Subaru 2.6 Class 6, Leases with C Swank Enterprises, LLC [Impaired] The Debtor has leases for the following vehicles: Ford F-250; 60 payments (RF-1) Ford F250 Pick-Up; 60 payments ( RF-2) 3. Isuzu NPR; 36 payments ( RF-5) Dodge Ram 4500; 48 payments (RF-8) Hino 238; 48 payments ( RF-11) Dodge Ram 550; 60 payments with $ monthly ( RF-16) Peterbilt, ( RF 20) Dodge Ram 2500; 48 payments RF-21) Peterbilt 388; 60 payments with $ monthly ( RF-23) International 5900i; 60 payments with $ monthly (RF-24) Peterbilt; 60 payments with $ monthly ( RF-25) Dodge Ram ( RF 26) Peterbilt 388; 60 payments with 26 months remaining (RF- 28) Peterbilt 388; 60 payments with $ monthly (RF- 29) Dodge Ram 5500; 60 payments with $ monthly (RF-31) 8

9 Document Page 9 of Peterbilt 388; 60 payments with $ monthly (RF-32) International 5900i; 60 payments with $ monthly (RF-33) Peterbilt 388; 60 payments with $ monthly (RF- 35) Peterbilt 388; 60 payments with $ monthly (RF-36) Peterbilt 388; 60 payments with $ monthly (RF-37) Peterbilt 388; 60 payments with $ monthly (RF-38) Peterbilt 388; 60 payments with $ monthly (RF-39) Peterbilt 388; 60 payments with $ monthly (RF-40) Peterbilt 388; 60 payments with $ monthly (RF-41) Ram 5500; 60 payments with $ monthly (RF-43) Ram 5500; 60 payments with $1, monthly (RF-44) Peterbilt 337; 60 payments with $3500 monthly (RF-45) Peterbilt 388; 60 payments with $ monthly (RF-50) Peterbilt 388; 60 months with $ monthly ( RF-51) Peterbilt 388; 60 payments with $ monthly ( RF-52) Peterbilt 388; 60 payments with $ monthly (RF-53) Peterbilt 388; 60 payments with $ monthly (RF-54) Peterbilt 388; 48 payments with $ monthly (RF-55) Peterbilt 388; 60 payments with $ monthly (RF-56) Peterbilt 388; 60 payments with $4, monthly (RF-57) Peterbilt 388; 60 payments with $ monthly (RF-61) Peterbilt 388; 60 Payments with $ monthly (RF-62) Peterbilt 367; 60 payments with $ monthly (RF-64) International 5900i s; 60 payments with $ mthly (RF-65) International 5900i s; 60 payments with $ mthly (RF- 66) Peterbilt 367; 36 payments with $ monthly (RF-69) Peterbilt 367; 48 payments with $ monthly (RF-70) International 5900i; 36 payments $ monthly (RF-71) Peterbilt 567; 36 payments with $ monthly (RF-72) Peterbilt 367; 48 payments with $ monthly (RF-73) Peterbilt 367; 48 payments with $ monthly (RF-74) Peterbilt 389; 48 payments with $ monthly (RF-75) Peterbilt 367; 60 payments with $ monthly (RF-76) 9

10 Document Page 10 of Peterbilt 367; 60 payments with $ monthly (RF-77) Peterbilt 367; 48 payments with $ monthly (RF-78) Peterbilt 389; 48 payments with $ monthly (RF-80) Peterbilt 389 (RF-81) Peterbilt 389; 48 payments with $ monthly (RF-82) Peterbilt 367; 36 payments with $ monthly (RF-83) Peterbilt 389S; 36 payments with $ monthly (RF-84) Peterbilt 389S; 36 payments with $ monthly (RF-85) Aspen Trail; 12 payments Alpine 5 th Wheel; 36 payments with $ monthly 2.7 Class 7, Executory Contracts [Impaired] a. 10 Industrial Park Drive, Carmichael, PA b Route 56, Spring Church, PA c Bailey Road, Barnesville, OH d. 198 East Main Street, Salem, WV e. 955 Canyon Road, Morgantown, WV f. Comdoc copier lease 2.8 Class 8, Priority Tax Claims 1. Department of Treasury Internal Revenue Service 2. Berkheimer-Local Taxes 3. Office of UC Tax Services 4. OH Department of Job and Family Services 5. OH Department of Taxation 6. PA Department of Revenue 7. WV Unemployment Compensation 8. WV State Tax Department 9. Pa Department of Labor and Industry 2.9 Class 9, Essential Vendors who provide post- confirmation Credit a. Gutman Oil b. Jacobs Petroleum c. Hunter s Truck Sales & Service, Inc. [Impaired] 2.10 Class 10, General Unsecured Creditors [Impaired] 2.11 Class 11, Creditors who have claims arising from Debtor s Guaranty(s) of 10

11 Document Page 11 of 53 the debt(s) of related entities. [Impaired] 2.12 Class 12, Equity Holders [Impaired] ARTICLE 3 - DESIGNATION OF CLASSES 3.1 Class 1 shall consist of fees to the U.S. Trustee; the Clerk of Courts and any professional's fees which are entitled to priority under 11 U.S.C. Section 507(a)(1). These shall include the following: (a) (b) (c) Attorneys for Debtor, Calaiaro Valencik; John Steiner, Attorney for the Official Committee of Unsecured Creditors, the accountant for the Debtor, Matt Tymoczko All U.S. Trustee's fees and Clerk of Bankruptcy Court charges. This Class shall also include administrative expenses incurred during the administration, including the following: 1. Utilities 2. Fuel purchases 3. Post petition expenses of Operations 3.2 Class 2 consists of the allowed perfected secured claim of First National Bank of Pennsylvania ( FNB ). FNB is the holder of first priority security interest liens in the personal property assets of Debtor, including inventory, chattel paper, accounts, receivables, equipment, documents and general intangibles as well as certain titled motor vehicles as more fully set forth in certain notes, security agreements, guarantees and other loan security documents ( Loan Documents ) executed by the Debtor. As of the Petition Date, the total secured claim of FNB is $2,734, with additional interest at the contractual per diem rate plus late charges and fees and costs, including without limitation attorneys fees and costs allowed under Section 506 of the Bankruptcy Code. FNB s secured claim is composed of the following seven (7) Loans ( FNB Loans ): 11

12 Document Page 12 of 53 A. $64, Loan # The Debtor borrowed $64, from FNB and executed a security agreement in the Debtor s assets as provided for more fully in the Loan Documents. The balance due as of September 15, 2016 was $30, plus continuing interest and fees and costs as provided for under the Loan Documents and 506 of the Bankruptcy Code. B. $100, Loan # The Debtor borrowed $100, from FNB and executed a security agreement in the Debtor s assets as provided for more fully in the Loan Documents. The balance due as of September 15, 2016 was $47, plus continuing interest and fees and costs as provided for under the Loan Documents and 506 of the Bankruptcy Code. C. $750, Loan # The Debtor borrowed $750, from FNB and executed a security agreement in the Debtor s assets as provided for more fully in the Loan Documents. The balance due as of September 15, 2016 was $766, plus continuing interest and fees and costs as provided for under the Loan Documents and 506 of the Bankruptcy Code D. $80, Loan # The Debtor borrowed $80, from FNB and executed a security agreement in the Debtor s assets as provided for more fully in the Loan Documents. The balance due as of September 15, 2016, was $29, plus continuing interest and fees and costs as provided for under the Loan Documents and 506 of the Bankruptcy Code. E. $200, Loan # The Debtor borrowed $200, from FNB and executed a security agreement in the Debtor s assets as provided for more fully in the loan documents. The balance due as of September 15, 2016, was $76, plus continuing interest and fees and costs as provided for under the loan documents and 506 of the Bankruptcy Code. F. $2,200, Loan # The Debtor guaranteed a $2,200, loan to C Swank secured by the aforementioned security agreements in the Debtor s assets and related Loan Documents. The balance due as of September 15, 2016, was $1,514, plus continuing interest and fees and costs as provided for under the Loan Documents and 506 of the Bankruptcy Code. G. $492, Loan # On or about December 5, 2014, Debtor guaranteed $492, loan to C Swank secured by the aforementioned security agreements in the Debtor s assets and related Loan Documents. The balance due as of September 15, 2016, was $266, plus continuing interest and fees and costs as provided for under the Loan Documents and 506 of the Bankruptcy Code. On or about August 30, 2016, FNB filed a Complaint in Confession of Judgment against the Debtor and Carol A. Swank on the loans in the Court of Common Pleas of 12

13 Document Page 13 of 53 Armstrong County, Pennsylvania at Case No entering judgment against the Debtor in the amount of $948,327.33, plus continuing interest, fees, and costs; On or about August 30, 2016, FNB filed a Complaint in Confession of Judgment against the Debtor on certain loans to C Swank Enterprises, LLC and Carol A. Swank, which the Debtor guaranteed and secured by way of the aforementioned Security Agreements, in the Court of Common Pleas of Armstrong County, Pennsylvania at Case No entering judgment against the Debtor in the amount of $1,723,166.92, plus continuing interest, fees, and costs; FNB has filed claims at POC#s 26, 27, 28,29,30,31, and 32 for the amounts set forth above totaling $ 2,734, During the Chapter 11 case the Debtor and FNB entered into certain Stipulations Allowing the Use of Cash Collateral and Establishing Adequate Protection docketed at Docket Nos. 22, 51, 80, 125 and 178 and Orders approving the same at Docket Nos. 29, 53, 82, 133 and 179 ( Cash Collateral Stipulations and Orders ). In the Cash Collateral Stipulations and Orders, the Debtor reaffirmed the Debt and the Loan Documents referred to therein and obtained the right to use the cash collateral under terms which were approved by the Bankruptcy Court, after notice and a hearing on that agreement. Upon confirmation of the Plan, the balances on the FNB Loans shall be administratively consolidated by the Debtor into one loan amount 1. FNB s allowed secured claim will be paid in full with a fixed interest rate of five percent (5%) per annum with monthly minimum payments of $14, paid on the 15 th day of each month. All 1 Substantively the FNB Loans shall remain as separate loans with FNB. 13

14 Document Page 14 of 53 payments shall in be applied and allocated by FNB in its sole discretion to the indebtedness under the Loans. Notwithstanding any other provision in this Disclosure Statement and the Chapter 11 Plan, all of FNB s liens and judgments are retained. The obligations, terms, and conditions set forth in FNB s Loan Documents including the notes, loan agreements, security agreements and guaranties judgments and any other documents with the Debtors are reinstated and reaffirmed unless otherwise amended herein and shall remain in full force and effect. FNB shall be entitled to payment of its reasonable attorneys fees and costs pursuant to 11 U.S.C. 506(d). The treatment of FNB s secured claim herein shall not in any manner discharge, or affect the rights and claims of FNB against any other persons or entities or the obligations of any person or entity to FNB with respect to the indebtedness, including C Swank Enterprises, LLC and Carol Swank. Upon confirmation of the Plan, all pre-confirmation defaults will be waived. 3.3 Class 3 shall consist of Ally Bank, the holder of a perfected security interest and encumbrance on a 2014 Dodge Caravan. The Creditor has filed a claim at POC # 11 in the amount of $13, Ally Bank is the holder of a perfected security interest and encumbrance on a 2014 Jeep Wrangler. The Creditor has filed a claim at POC # 10 in the amount of $21, Ally Bank is the holder of a perfected security interest and encumbrance on a 2014 Ram The Creditor has filed a claim at POC # 9 in the amount of $32, Ally Bank is the holder of a perfected security interest and encumbrance on a 2014 Ram The Creditor has filed a claim at POC # 8 in the amount of $24, The total secured claim of the Creditor is $91, The Creditor will be paid in full over five (5) years with a fixed interest rate of five percent (5%). 14

15 Document Page 15 of Class 4 shall consist of Chrysler Capital, is the holder of liens on two 2014 Ram 2500, a 2014 Ram 1500, and a 2015 Ram The Creditor has filed claims at POC #5 in the amount of $18,067.69, at POC #6 in the amount of $18,070.99, and at POC # 7 in the amount of $24, The Creditor did not file a claim for the 2015 Ram 1500, VIN: 4922, for which the Debtor believes that the Creditor is owed $26, The total secured claim of this Creditor is $87, Chrysler Capital will be paid in full over five (5) years with a fixed interest rate of five percent (5%). 3.5 Class 5 shall consist of J.P Morgan Chase Bank N.A., the holder of a perfected security interest and encumbrance on a 2014 Subaru. The Creditor has filed a claim at POC # 22 in the amount of $16, The Creditor will be paid in full over five (5) years with a fixed interest rate of 5 percent (5%). 3.6 Class 6 shall consist of the Motor Vehicle and Equipment Leases with C Swank Enterprises, LLC. C Swank is a related entity of the Debtor; they have a common owner; Carol Swank who is the sole member of both limited liability corporations. These are the leases which were in effect when the bankruptcy case was commenced Ford F-250; 60 payments (RF-1) Ford F250 Pick-Up; 60 payments ( RF-2) 3. Isuzu NPR; 36 payments (RF-5) Dodge Ram 4500; 48 payments (RF-8) Hino 238; 48 payments (RF-11) Dodge Ram 550; 60 payments with $ monthly (RF-16) Peterbilt ( RF 20) Dodge Ram 2500; 48 payments (RF-21) Peterbilt 388; 60 payments with $ monthly (RF-23) International 5900i; 60 payments with $ monthly (RF-24) Peterbilt; 60 payments with $ monthly (RF-25) 15

16 Document Page 16 of Dodge Ram ( RF 26) Peterbilt 388; 60 payments with 26 months remaining (RF- 28) Peterbilt 388; 60 payments with $ monthly (RF- 29) Dodge Ram 5500; 60 payments with $ monthly (RF-31) Peterbilt 388; 60 payments with $ monthly (RF-32) International 5900i; 60 payments with $ monthly (RF-33) Peterbilt 388; 60 payments with $ monthly (RF- 35) Peterbilt 388; 60 payments with $ monthly (RF-36) Peterbilt 388; 60 payments with $ monthly (RF-37) Peterbilt 388; 60 payments with $ monthly (RF-38) Peterbilt 388; 60 payments with $ monthly (RF-39) Peterbilt 388; 60 payments with $ monthly (RF-40) Peterbilt 388; 60 payments with $ monthly (RF-41) Ram 5500; 60 payments with $ monthly (RF-43) Ram 5500; 60 payments with $1,500.00monthly (RF-44) Peterbilt 337; 60 payments with $3500 monthly (RF-45) Peterbilt 388; 60 payments with $ monthly (RF-50) Peterbilt 388; 60 months with $ monthly (RF-51) Peterbilt 388; 60 payments with $ monthly (RF-52) Peterbilt 388; 60 payments with $ monthly (RF-53) Peterbilt 388; 60 payments with $ monthly (RF-54) Peterbilt 388; 48 payments with $ monthly (RF-55) Peterbilt 388; 60 payments with $ monthly (RF-56) Peterbilt 388; 60 payments with $4, monthly (RF-57) Peterbilt 388; 60 payments with $ monthly (RF-61) Peterbilt 388; 60 Payments with $ monthly (RF-62) Peterbilt 367; 60 payments with $ monthly (RF-64) International 5900i s; 60 payments with $ mthly (RF-65) International 5900i s; 60 payments with $ mthly (RF- 66) Peterbilt 367; 36 payments with $ monthly (RF-69) Peterbilt 367; 48 payments with $ monthly (RF-70) International 5900i; 36 payments $ monthly (RF-71) Peterbilt 567; 36 payments with $ monthly ( RF-72) 16

17 Document Page 17 of Peterbilt 367; 48 payments with $ monthly ( RF-73) Peterbilt 367; 48 payments with $ monthly (RF-74) Peterbilt 389; 48 payments with $ monthly (RF-75) Peterbilt 367; 60 payments with $ monthly ( RF-76) Peterbilt 367; 60 payments with $ monthly ( RF-77) Peterbilt 367; 48 payments with $ monthly (RF-78) Peterbilt 389; 48 payments with $ monthly (RF-80) Peterbilt 389 (RF-81) Peterbilt 389; 48 payments with $ monthly (RF-82) Peterbilt 367; 36 payments with $ monthly (RF-83) Peterbilt 389S; 36 payments with $ monthly (RF-84) Peterbilt 389S; 36 payments with $ monthly (RF-85) Aspen Trail; 12 payments Alpine 5 th Wheel; 36 payments with $ monthly 3.7 Class 7 shall consist of Executory Contracts for Real Estate with the Debtor A. 10 Industrial Park Drive, Carmichael, PA This is a lease between the Debtor and Bravo Charlie LLC., The lease is for a 5 year term Commencing on July 14, The rent is $12, per month. B Route 56, Spring Church, PA This is a lease between the Debtor and Katheryn Swank Corcetti. The rent is $3, per month. The pre-petition arrearage is $22, C Bailey Road, Barnesville, OH This is a lease between the Debtor and Deborah Kaiser, The lease is for a 5 year term Commencing on July 14, The rent until July 2016 was $2, per month. Thereafter the rent increased to $3, per month. The Debtor is in arrears in the amount of $10, and the Debtor has post petition amounts due in the amount of $1, D. 198 East Main Street, Salem, WV This is a lease between the Debtor and Thomas Mason, Thomas Mason, the holder of a rejected lease claim in class 7. He must file a rejection claim as an unsecured creditor prior to the deadline to date set by this court to object to the confirmation of the Plan of Reorganization. Thomas Mason is permitted to vote his rejection claim as an unsecured creditor in class 10, (This lease has been rejected by the Debtor) 17

18 Document Page 18 of 53 E. 955 Canyon Road, Morgantown, WV This is a lease between the Debtor and Twins LLC. The rent was $2, per month. F. The Debtor has a lease for a copier with Comdoc. It had outstanding arrears of $ 1, Class 8 shall consist of Priority Tax Creditors who were owed taxes as of September 15, Participation in this class shall be limited to pre-petition tax and interest through September 15, 2016, as follows: PRIORITY CLAIMS Creditor Total Amount Type of Collateral (D)(L)(U) * Berkheimer $8, Owed Local Withholding Disputed Berkheimer $1, LST Tax Disputed Internal Revenue Service $308, Taxes Disputed POC # 17- Disputed Internal Revenue Service $1, Taxes Disputed POC # 17- amended Disputed- (Includes unassesed liabilities) Office of UC Tax Services $43, PA UC Fund-Employer Disputed Portion Office of UC Tax Services $1, Employee Withholding Disputed OH Department of Job and Family $13, OH Unemployment Disputed Services OH Dept. of Taxation $15, OH Withholding Disputed PA Department of Labor & industry- $39, PA Withholding PA Department of Revenue POC # $78, PA Withholding Disputed as to allowability of Penalty. $ WV Unemployment Disputed Unemployment Compensation Division WV State Tax Department- $7, WV Withholding Disputed Disputed TOTAL $517, Class 9 shall consist of Essential Creditors who had an allowed claim against the Debtor as of September 15, This class consists of the Unsecured Creditors who 18

19 Document Page 19 of 53 have continued to provide goods and services to the Debtor at preferred pricing and who will continue to provide goods and services on credit terms to the Reorganized Debtor. These creditors provide essential goods and services to the Debtor. The following list sets forth the members in Class 9: GENERAL UNSECURED NON-TAX CLAIMS- Essential Creditors Who Continue to Work with the Debtor Class 9 Creditor Class Total Amount Owed Reason why this creditor is in class 9 Guttmann Oil-POC # 18 9 $76, Supplies fuel at a discount and on preferred credit terms. Jacobs Petroleum Products, Inc.- POC # 41 9 $63, Supplies fuel at a discount and on preferred credit terms Hunter s Truck Sales & Service Inc.- POC # 43 9 $64, Provides truck repairs and parts at a discount and on preferred credit terms TOTAL $204, Any creditor may opt out of Class 9 if they choose to cease doing business with the Debtor. Any creditors who opt out of class 9 prior to payment of their claim in full shall be transferred class 10 for the balance of their payments. In order to remain in class 9, class 9 participants must continue to provide goods and services to the Debtor on a preferred pricing and extend post-confirmation credit terms to the Debtor. Guttmann Oil is a party to an executory contract with the Debtor. The Bankruptcy Court previously assumed the assumption of that contract and this plan treatment is in accordance with the prior Order approving that assumption. The other members of this class assert they have executory contracts. Their contracts, as modified by their agreement to participate in class 9 and to be bound by the Plan, are assumed by the confirmation of this Plan Class 10 shall consist of General Unsecured Creditors who had an allowed 19

20 Document Page 20 of 53 claim against the Debtor as of September 15, This class is made up of General Unsecured Claims in the approximate amount of $ 885, Some of the creditors claims in this class are disputed. Participation in this class shall be limited to the amount due as of September 15, The claims in this class shall not include any late charges, interest or attorney s fees after date of filing. This class does NOT include the claims of Class 9 Essential Creditors of $204,057.54; and it also excludes the contingent guaranty claims in Class 11 in the approximate amount of $1,594, who hold the guaranties of the Debtor who are members of class Class 11 shall include the claims of creditors who loaned money to an affiliate of the Debtor and the Debtor guaranteed the debts of that affiliate. These debts are contingent liabilities. These guaranty liabilities are being separately classified. This class is comprised of: Creditors who have claims arising from guaranties of related entities.-class 11 Claims Creditor Class Total Amount Owed Percent of Dividend First Commonwealth Bank-POC # $750, No Dividend Paccar Financial Corp POC # 2 11 $ 138, No Dividend Paccar Financial Corp POC # 3 11 $ 379, No Dividend TCF Equipment Finance- POC # $325, No Dividend GE Navistar Capital 11 $99, No Dividend TOTAL $1,693, Class 12 shall consist of the Equity Shareholders in the Debtor. The only member of this class is Carol Swank, who holds 100% of the Debtor. ARTICLE 4 - IMPAIRMENT 2 This does not include the general unsecured tax claims of $ 19,

21 Document Page 21 of 53 The following classes are not impaired under this Plan: Class 1 - Unimpaired The following classes are Impaired under this Plan; they are entitled to vote upon the confirmation: Class 2 - Impaired Class 3 - Impaired Class 4 Impaired Class 5 - Impaired Class 6 - Impaired- Not Entitled to Vote on the Plan Class 7 - Impaired Class 8 - Impaired Class 9 - Impaired Class 10- Impaired Class 11 -Impaired Class 12- Impaired- Not Entitled to Vote on the Plan ARTICLE 5 - MEANS FOR IMPLEMENTATION OF THE PLAN 5.1 Vesting of Assets in Reorganized Debtor On the Effective Date of the Plan, by operation of this Plan and the Confirmation Order, all Assets of the Debtor and its estate shall be transferred to, and vest in, the Reorganized Debtor. 5.2 Implementation The Plan is to be implemented by the reorganized Debtor through payments from the post-confirmation operation of the Debtor. 5.3 Corporate Action All matters provided for under the Plan involving the corporate structure of the Debtor or the Reorganized Debtor, or any corporate action to be taken by, or required of, the Debtor or the Reorganized Debtor, shall be deemed to have occurred and be effective as provided in the Plan and shall be authorized and approved in all respects without any requirement of further action by the stockholders or directors of the Debtor or the Reorganized Debtor, pursuant to Section 1903 of the Pennsylvania Business Corporation Law of 1988, as amended. 21

22 Document Page 22 of Management of the Reorganized Debtor The Management of the Day to Day business affairs of the Debtor shall be conducted by Brian Swank who shall be employed as the President and Chief Executive Officer. Brian Swank has also agreed to limit his post confirmation salary to improve plan feasibility. Brian Swank has agreed that his post-confirmation salary for 2017 and 2018 will be $ His salary will not exceed $60, per year in 2019; this salary shall not be increased until after Jan. 1, After January 1, 2020, Brian Swank s salary may be increased only if the Debtor is current on payments to classes 2, 3, 4, 5, 6, 7, 8, 9 and 10. Carol Swank shall be managing Member and she will be the treasurer of the Reorganized Debtor. She shall contract with the Reorganized Debtor to work for an initial period of five years. Carol Swank has agreed that her post- confirmation salary for 2017 and 2018 will be $ Her salary will not exceed $ 60, per year in 2019; this salary shall not be increased until after Jan. 1, After January 1, 2020, Carol Swank s salary may be increased only if the Debtor is current on payments to classes 2, 3, 4, 5, 6, 7, 8, 9 and 10. The Agreements for the employment of Brian Swank and Carol Swank ( Employment Agreements ) will be executed by the Reorganized Debtor upon the entry of the Confirmation Order. Pursuant to the Employment Agreements, the Treasurer will be responsible for all aspects of operating and financial aspects of the business. The Executives agree that during the term of this Plan of Reorganization, they will not directly compete with the Reorganized Debtor. 5.5 Funding of the Plan. The Reorganized Debtor shall fund the Plan by using the profits from operating the business. Without limiting the generality of the foregoing, the 22

23 Document Page 23 of 53 Plan will be implemented by the Reorganized Debtor through the continued operation of the business. 5.6 Litigation Necessary or Possible to Consummate Plan. (A) Objections to claims. (B) Allowance of any administrative claim by any professional or administrative claimant. (C) (D) Actions to enforce the confirmed plan. The post-confirmation Debtor shall be entitled to all defenses, rights and counterclaims against any Creditor without allowed Claims in establishing the arrearages, or any amount due. (E) An injunction under 11 U.S. C. 105 enjoining parties with the exception of FNB and FNB Commercial Leasing which has entered into a forbearance agreements with Carol Swank, from the enforcement of any claim against C. Swank Enterprises, LLC, Carol Swank, Brian Swank for guaranties of Royal Flush Inc. s debts. The Plan does not contemplate the prosecution of any chapter 5 actions against any class 9, 10 or 11 member. 5.7 Escrow of any Disputed Claim. (A) At the time of distribution under the Plan, the Debtor may pay into an escrow account any payment(s) for disputed Creditors until such time as a final order allowing that claim is entered. (B) The Debtor may escrow any payment to any Creditor if there is a possible claim or setoff that may be asserted against that Creditor. (C) The escrow account shall bear interest. If the Creditor is fully secured, the interest earned shall be the property of the Creditor; but that Creditor's right to post- 23

24 Document Page 24 of 53 Confirmation interest shall be limited to the actual earned interest. If the disputed Creditor is unsecured, the interest shall be the property of the estate. 5.8 Miscellaneous. (A) The Disbursing Agent and the Debtor shall have the right to negotiate with any administrative claimant, any secured Creditor, or any disputed Creditor, any insurance carrier, or any account receivable to discount or settle any dispute. The Debtor will not need Court approval to discount or settle any claim(s) after the confirmation of the Plan (B) All causes of action, all avoiding powers, and all choses in action of any type which were the property of the Debtor at the time of the commencement of this case shall remain the property of the Debtor under this Plan until administration of the estate is complete. (C) Donald Robert Calaiaro shall act as the Disbursing Agent for Class 10. He shall be paid $ for each month following confirmation until both classes are paid in full. After Final Decree, these Disbursement Agent fees shall be in lieu of legal fees for any services necessary to implement the Plan and make distributions to Creditors. He shall be reimbursed for any out of pocket expenses for postage, copying and bookkeeping. These amounts shall be in addition to any actual expenses and shall not cover any legal fees due to Calaiaro Valencik. ARTICLE 6 - PROVISIONS FOR CLAIMS AND EQUITY SECURITY INTERESTS GENERALLY 6.1 At the time the Confirmation Order becomes a Final Order, the Debtor and the reorganized Debtor shall have its relationships modified and superseded by the terms of the Plan. Any amount, which is not to be paid under the Plan, shall be discharged upon 24

25 Document Page 25 of 53 the confirmation of the Plan. The reorganized Debtor shall be deemed to have the benefits of Code Section 1141(c) and the Debtor shall be fully discharged and released from any amounts not contemplated to be paid under this plan. 6.2 In the event that the claim of any creditor is contingent, unliquidated or subject to dispute on the confirmation date, the Debtor or the Creditor may, in their sole discretion, request the Bankruptcy Court to estimate for the purpose of allowance under Section 502 of the Code, as soon as practicable after the confirmation date, (a) any disputed, contingent or unliquidated claim, the fixing or liquidation of which, as the case may be, would unduly delay the administration of this Chapter 11 case, and (b) any right to payment arising from a right to an equitable remedy for breach of performance. Any Disputed Creditor, who has not sought the right to vote an estimated amount prior to a hearing on the confirmation hearing, shall not be entitled to vote upon this Plan of Reorganization. 6.3 Post Confirmation Injunction. Except as otherwise provided for herein, all entities that hold a claim against the Debtor is enjoined from taking any actions on account of any such claims, debts of liabilities: A. Commencing or continuing in any manner any action or other proceedings against the Reorganized Debtor, Debtor s Estate or any property included in that estate, unless there has been a material default under the Confirmed Plan. B. Enforcing, attaching, collecting or recovering in any manner any judgment, award, decree or order against Reorganized Debtor, Debtor s Estate, or any property included in that estate, unless there has been a material default under the Confirmed Plan. 25

26 Document Page 26 of 53 C. Enforcing any guaranty of the Debt of Royal Flush against any shareholder, officer or affiliate of the Debtor, except FNB which has a forbearance agreement with Carol Swank, Brian Swank or any other related entity. D. Creating, perfecting or enforcing any lien or encumbrance Reorganized Debtor, Debtor s Estate, or any property included in that estate, unless there has been a material default under the Confirmed Plan. E. Taking any action which is inconsistent with the Confirmed Plan. ARTICLE 7 - TREATMENT UNDER THE PLAN AND PROVISION FOR PAYMENT 7.1 Administrative Claims. The Class 1 claims, to the extent that they are allowed administrative claims, shall be paid their principal claim in full without interest on or before the distribution date by a cash payment to the holder of such a claim except as provided below or as otherwise agreed by each member of the class of persons in this class. Professional persons in Class 1 whose claims have been finally approved and allowed by the court pursuant to Code Section 330 or 503 shall be paid on the Plan Effective Date. The professional persons and the Debtor may agree to pay these allowed fees over time with interest and the Debtor may grant a security interest in its assets to insure these payments. 7.2 Class 2 - First National Bank of Pennsylvania - The debt(s) owed to First National Bank of Pennsylvania (FNB) will have a modified Secured Claim of $2,734, plus interest, late charges and fees and costs, including without limitation attorneys fees and costs which FNB is entitled to under Section 506 of the Bankruptcy Code., as set out in the Cash Collateral Stipulations and Orders, less adequate protection 26

27 Document Page 27 of 53 payments; but including allowed counsel fees and costs. The modified Secured Claim shall be treated pursuant to the provisions of the Bankruptcy Code 1129 (b) (2) (A) as follows: (A) ADEQUATE PROTECTION PAYMENTS. The Debtor will make adequate protection payments until the Plan Effective Date. (B) MODIFIED SECURED CLAIM/ CONSOLIDATION OF LOANS. Upon confirmation, the modified Secured Claim, less credit for adequate protection payments and additional payments, shall be restructured to reflect the reduced balance. The balances on the FNB Loans shall be administratively consolidated by the Debtor into one Secured Claim amount 3. a. The first payment will be made on the Plan Effective Date and until that date, the Debtor shall continue to pay FNB each month the adequate protection payments agreed to by the parties and approved by the Court. FNB s allowed secured claim will be paid in full with a fixed interest rate of five percent (5%) per annum with monthly minimum payments of $14, paid on the 15th day of each month after the initial payment on the Plan Effective Date. All payments shall in be applied and allocated by FNB in its sole discretion to the indebtedness under the Loans. Notwithstanding any other provision in this Disclosure Statement and the Chapter 11 Plan, all of FNB s liens and judgments are retained. The obligations, terms, and conditions set forth in FNB s Loan Documents including the notes, loan agreements, security agreements and guaranties judgments and any other documents with the Debtors are 3 Substantively the FNB Loans shall remain as separate loans with FNB. 27

28 Document Page 28 of 53 reinstated and reaffirmed unless otherwise amended herein and shall remain in full force and effect. FNB shall be paid its reasonable attorneys fees and costs pursuant to 11 U.S.C. 506(d) as it is fully secured. The treatment of FNB s secured claim herein shall not in any manner discharge, or affect the rights and claims of FNB against any other persons or entities or the obligations of any person or entity to FNB with respect to the indebtedness, including C Swank Enterprises, LLC and Carol Swank. Upon confirmation of the Plan, all pre-confirmation defaults will be waived. b. The Principal of the Debtor will also contribute additional payments to FNB on terms mutually agreed upon by the Parties in a forbearance agreement. (C) WAIVER OF PRE-CONFIRMATION DEFAULTS All pre confirmation defaults will be waived upon the confirmation of the Plan. (D) RESTATEMENT OF LOANS The Loan Documents and terms and conditions shall be reserved unless where they are in conflict with the Terms of this plan. The Debtor reaffirms and ratifies all of the Loan Documents, including all terms, conditions and obligations thereunder and further acknowledges and agrees that as of September 21, 2016, the indebtedness under the terms of the Loan Documents was $2,734, as set forth in the Cash Collateral Stipulations and Orders together with additional interest at the contractual per diem rate plus late charges and fees and costs, including without limitation attorneys fees and costs which FNB is entitled to under Section 506 of the Bankruptcy Code. Debtor further agrees that FNB shall have allowed fully secured claims for the indebtedness relating to the FNB Loans, and the Debtor and C Swank Enterprises, LLC, 28

29 Document Page 29 of 53 their agents, officers, directors, employees, successors and assigns, release and waive any and all defenses, offsets or claims, including any FNB liability claims. (E) FORBEARANCE. Provided payments are made to FNB as provided hereunder, in the C Swank Plan and the Carol Swank forbearance agreement, FNB will forbear from enforcing any guaranty against the guarantors during the repayment period of the modified Secured Claim under the Plan. The guarantors will execute any agreement that stipulates that no defense, including statute of limitations or waiver, will occur as a result of the lender accepting this treatment under this plan of reorganization. Provided the reorganized Debtor makes all payments under this plan and the C Swank Chapter 11 Pan and FNB is paid in full, FNB will waive any claims against the guarantors for any amount in excess of the plan payments. FNB will forbear from exercising any execution of its judgments, Case No and No against the Debtor while the Debtor is in compliance with the Plan and provided C Swank is in compliance with its Plan. (F) DEFAULT. Upon the occurrence of any Event of Default arising from a failure to comply with the plan requirements set forth herein, in the C Swank Plan and/or the Carol Swank forbearance agreement, which is not cured within ten (10) business days after FNB shall have provided written notice to the Debtor and its counsel via of such Event of Default or the failure to cure any other Event of Default within ten (10) business days after FNB shall have provided written notice to the Debtor and its counsel via of such Event of Default, FNB shall be permitted to exercise its remedies under the Loan Documents and the Judgments, including invoking the contractual default rate of interest after the default. (G) Royal Flush, Inc. will not declare any dividends to its shareholders during the 29

30 Document Page 30 of 53 period of the repayment to Class 2. The Debtor may retain necessary cash reserves to protect against any instability in its cash flow, a capital reserve for future repairs and maintenance of its equipment and an appropriate reserve for future capital acquisitions. Prior to the beginning of each quarter, the Debtor shall prepare a budget to set forth the necessary reserves to protect against any instability in its cash flow, a capital reserve for future repairs and maintenance of its equipment and an appropriate reserve for future capital acquisitions, income taxes and payment of administrative claims of Professionals which it intends to retain for each quarter. This budget shall be provided to FNB prior to the beginning of each quarter. In the event there are excess funds available at the end of the subject quarter in excess of the budgeted amounts for the reserves, the Reorganized Debtor will use all such cash reserves to pre-pay the class 2 claims of First National Bank of Pennsylvania. 7.3 Class 3 - Ally Bank- The Class 3 claims of Ally Bank, now known as Santander, arising from loans a 2014 Ram 2500, a 2014 Ram 5500, a 2014 Jeep Wrangler, and a 2014 Dodge Grand Caravan will be modified under this plan. The Creditor has filed claims at POC # 8 in the amount of $24,113.32, at POC # 9 in the amount of $32,091.29, at POC #10 in the amount of $21,599.63, and at POC # 11 in the amount of $13, The total secured claim of the Creditor is $91, Each of Ally Bank s loans will be modified into a single Modified Secured Claim for the unpaid principal, interest and other amounts due as of the Plan Effective Date. This amount shall be the Modified Secured Claim The Modified Secured Claim shall be treated pursuant to the provisions of the Bankruptcy Code 1129 (b) (2) (A) as follows: 30